The Wheatley Review into Libor has ruled out leaving Libor unchanged, given the weaknesses and loss of credibility the inter-bank lending rate has suffered.
A Treasury discussion paper, published today, calls for the rate to be “significantly strengthened” and for the governance of Libor to be made more robust and transparent.
It also calls for Libor alternatives to be considered, with the creation of new benchmarks also mooted.
However, the Treasury says any adoption of alternative benchmarks will require international coordination, given the global importance of Libor.
Financial Conduct Authority chief executive designate and head of the review Martin Wheatley says: “It is clear that regardless of the outcome of ongoing international investigations, trust in a vital part of the financial system has been badly damaged and timely action is needed to repair it.”
Treasury financial secretary Mark Hoban adds: “This discussion paper demonstrates that we will give regulators the powers they need to prevent the manipulation of key benchmark rates in the future.
“This review will report by the end of the summer in time for any necessary changes to be taken forward in legislation. The Government is also working with its international partners to inform the international work in this area and work towards a globally consistent solution.”
Responses to the paper must be submitted by 7 September and Wheatley will report his findings to the Treasury by the end of September